Meade Shares Soar 77% on TeraBeam Deal
Shares of Irvine telescope maker Meade Instruments Corp. rocketed more than 77% on Wednesday as the company was tabbed as a supplier for red-hot TeraBeam Networks, which plans to use lasers to transmit high-density data, video and Web content.
Meade already dominates the worldwide telescope market, garnering about half the estimated $250 million in sales. But the TeraBeam deal puts Meade’s expertise in creating light-gathering instruments to new use, moving it beyond consumer products into the potentially lucrative business of high-speed Internet connections, analysts said.
“This makes sense and it opens up a new market for them with open-ended growth,” said Bob DeLean, an analyst at Morgan Keegan & Co.
The company’s stock more than doubled to $60 at one point Wednesday, then retreated to $53, up $23.13 a share, in Nasdaq trading. More than 5 million shares changed hands, almost 60 times the average daily volume for the last three months.
Meade executives did not put a dollar value on the TeraBeam deal or say whether it involves manufacturing a new product or repackaging existing technology.
Meade had not intended to release information on the deal yet, but news leaked out after TeraBeam unveiled its product Monday at the PC Forum conference in Arizona. Despite the market’s euphoric response, a company executive sounded a cautious note.
“We certainly think it’s an exciting opportunity for us, but its effect on Meade is entirely dependent on TeraBeam’s ability to execute its business plan,” said Chief Financial Officer Brent Christensen.
TeraBeam grabbed national attention recently by luring away the president of AT&T;’s wireless unit, Daniel R. Hesse, who may have given up as much as $50 million in stock options to take over the Seattle start-up. Japanese investment giant Softbank Inc., which also owns stakes in Yahoo and Aliso Viejo-based Buy.com, is among TeraBeam’s backers.
“There’s a lot of excitement about them and anyone associated with them,” said Brion Tanous, an analyst at First Security Van Kasper.
Meade, which was founded in 1972 and went public in 1997, has thrived by pioneering ways to put features formerly found only in expensive telescopes into models affordable to amateur stargazers.
Analysts estimate that the company’s profit and sales more than doubled in the fiscal year that ended Feb. 28. The company will release its earnings in a couple of weeks.
The company sells more than 40 models of telescopes, priced from less than $100 to more than $15,000, at retail chains such as Wal-Mart, Nature Co. and Natural Wonders. The mid- and higher-priced models are made in Irvine and Tijuana. The lower-priced products are made in Taiwan.
